Key issues in Bright Light Solar Prospectus – invest to earn 21% after-tax

Since we first exposed the Biznews community to Bright Light Solar, hundreds have responded to CEO Kevin Shames who tells us he has been engaging directly with each one. What has excited investors is the way a combination of the tax allowances and dividends deliver an annual return of 21% after tax over the minimum five year holding period. With the Prospectus set to be issued this week, in this special podcast Shames unpacks which parts of the 157 page document investors need to look at most closely. For more information from Shames and his team, click here. – Alec Hogg 

The latest in our series of special podcasts on the Bright Light Solar offering takes a close look at the Prospectus set to be released soon. In this interview, company CEO Kevin Shames explains that like any other public fund raising offer, Bright Light’s Prospectus has been lodged with the CIPC. He expects approval to be granted this week.

The 157-page Prospectus can be daunting for potential investors, but as discussed in the podcast the starting point is to focus on the quality of the advisory firms prepared to put their names to the document.

In this case, leading law firms Werksmans and CDH and multinational accounting group BDO have checked through the details and projections and put their names to the document – a big plus for those considering taking advantage of the returns projected by the Section 12J company.

On that score, the annual 21% after tax return is achieved through an immediate write-off against taxable income which investors will receive in the tax year that ends on February 29, supplemented by the dividends to be paid by the company during the minimum five year term of the investment.

Shames warns that although 12J qualifying companies like Bright Light have the potential to be excellent tax planning tool, investors need to be fully aware that should they decide to cash in ahead of the minimum five year period, they will be liable to repay the full tax benefit.

The Prospectus is targeting a total of R100m in fresh capital, but Shames says there is the capacity to raise more. Indeed, there is actually no limit as Bright Light has demand for over R1bn for funds from the qualifying companies it works with.

Because of the way it has structured the offering around the 12J and renewable energy tax incentives, Bright Light is able to provide an irresistible solar power solution for its target market of residential Body Corporates.

Home owners in these complexes pay nothing for the installation and are guaranteed lower electricity fees than they are currently having to meet – with the added benefit that future increases will be below the level granted by Nersa.

For more information and to receive a copy of the Prospectus, click here.

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